Anthem Suffers Setback in Bid for Cigna Decision by Year-End

  • Judge schedules U.S. antitrust trial to start Nov. 21
  • Justice Department says it’s open to settlement offers

Anthem Inc. will go to trial against the U.S. in late November to defend its $48 billion takeover of rival insurer Cigna Corp., a start date later than Anthem said it needed to potentially close the deal by an April deadline.

U.S. District Judge Amy Berman Jackson in Washington on Friday set a Nov. 21 start for the antitrust trial that she said would conclude by Dec. 30. With final filings in the case due Jan. 4, Anthem won’t get a ruling until January at the earliest.

Anthem had asked the judge to start the trial on Nov. 1, arguing that it would allow time for her to make a ruling on the deal by the end of the year. Anthem said it needs a year-end decision so it has time to get state regulatory approvals for the combination by the merger deadline of April 30. Jackson said at a hearing Friday that the company’s proposed schedule was too aggressive.

The company said in a later statement that it’s pleased the trial timeline “will allow for an expeditious resolution of the matter.”

“Anthem has an unwavering commitment to enhancing access to affordable, quality health care and remains confident that the benefits and efficiencies from its merger with Cigna, which will allow us to continue to improve consumer choice, quality and affordability,” Anthem spokeswoman Bonnie A. Jacobs said in an e-mail. “We look forward to the opportunity to presenting these very compelling arguments during the upcoming trial.”

Antitrust Suits

The Justice Department’s antitrust division sued last month to block the Anthem-Cigna tie-up and the separate $37 billion merger of Aetna Inc. and Humana Inc.. It contended that the combinations, which would reduce the number of national health insurers from five to three, would harm competition and undermine choice for consumers. The Aetna case is scheduled to go to trial on Dec. 5.

At the Friday hearing, the Justice Department said it was open to hearing settlement offers from Anthem to resolve the lawsuit. “We’re always willing to hear any proposals the defendants have,” Jon Jacobs, a lawyer for the government, told Jackson.

It’s common for the government to express a willingness to entertain settlement offers, and Jacobs’s remarks are no guarantee that an agreement can be reached.

“Of course the DOJ is going to always be willing to engage in discussions,” said Jennifer Rie, an antitrust analyst at Bloomberg Intelligence in New York. “I still think it’s hard to understand what the fix would be for all the issues that were raised by the Anthem-Cigna deal.”

‘A Surprise’

In a note to investors, analyst Ana Gupte of Leerink Partners said the Justice Department’s offer to hear settlement proposals “is clearly a surprise.” Gupte added that Leerink, and probably the rest of Wall Street, have viewed the probability of a successful trial or settlement at 25 percent or lower.

Cigna shares climbed 5.3 percent to close at $133.31. Anthem rose 1.6 percent to $130.19.

The Justice Department opposed Anthem’s proposal to start the trial on Nov. 1, saying that starting anytime this year would compromise its ability to prepare and argue its case. The April 30 merger deadline is within the companies’ control and can be extended, the government argued.

Anthem, citing “contentiousness” with Cigna over the takeover, has said it expects Cigna will terminate the deal after April 30. Anthem lawyer Christopher Curran told Jackson the deadline is “fixed.”

Rick Rule, a lawyer for Cigna, told the judge that he “can’t say” whether Cigna would terminate the merger agreement on April 30 but that the health insurer is committed to defending the combination in court.

“I can’t speculate as to what Cigna’s board will do on April 30,” he said.

The case is U.S. v. Anthem Inc., 16-cv-1493, U.S. District Court, District of Columbia (Washington).

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